Craft Beer Market Faces Notable Decline in Production and Sales
The first half of 2025 has seen a **downturn in demand for beer**, particularly impacting the craft segment. Production volumes within craft brewing declined by approximately 5%, with shipments falling nearly 6%, equating to 3.7 million fewer barrels produced (American Craft Beer, 2025). Sales in grocery and convenience stores declined both in dollar terms, by 6.3%, and volume, by 7.2%, over just the past month, indicating a sharp contraction in craft beer retail performance (American Craft Beer, 2025). Furthermore, the number of operating breweries also experienced a slight dip, accompanied by a drop in the Beer Purchasers’ Index to 15, well below the threshold that indicates growth (American Craft Beer, 2025). This signals significant pressure across the broader craft beer industry.
Shifts in Consumer Preferences and Market Competition
Experts attribute this downturn to **cultural shifts in drinking habits** rather than an outright decline in alcohol consumption. Younger consumers increasingly explore alternative beverages such as Mexican lagers, non-alcoholic IPAs, and ready-to-drink cocktails, while older drinkers reduce consumption for health or budgetary reasons (American Craft Beer, 2025). The growing competition from emerging categories is notably exemplified by the **rapid expansion of non-alcoholic beer sales, up nearly 30%**, now making up 1% of the total beer market (American Craft Beer, 2025).
Industry Impact Evidenced by Brewery Closures
The financial difficulties caused by these market changes are materializing in the closure of established breweries. The notable recent example is the **21st Amendment Brewery**, a veteran craft brewer with operations in San Francisco and San Leandro, which announced its shutdown after 25 years. The company cited annual sales declines of about 20% since 2021, compounded by rising raw material, transport, and packaging costs, and competition from hard seltzers and ready-to-drink cocktails as decisive factors (TheStreet, 2025). This closure is part of a broader trend including bankruptcy filings and shutdowns among other craft brewers (TheStreet, 2025).
Contrasting Outlook: Growth Potential in Select Segments and Sustainability
Despite the overall decline, certain **smaller-scale and hyperlocal breweries show resilience**. Approximately half of surveyed brewers reported production growth, particularly those producing under 1,000 barrels annually, suggesting that taprooms and brewpubs centered on local markets are adapting better to current conditions (Craft Brewing Business, 2025). Moreover, the industry is increasingly embracing sustainability, as environmental concerns are becoming a critical part of consumer decision-making, influencing packaging innovations and brewing processes to reduce carbon footprint significantly (IFAS Food Science, 2025).
Long-Term Market Projections and Regional Trends
Looking ahead, the **craft beer market is projected to grow at a compound annual growth rate (CAGR) of 8.74% from 2025 to 2033**, reaching a value of USD 329.7 billion globally. Europe currently leads the market with a 38.1% share, driven by robust demand for premium and unique beer flavors, expanding microbrewery networks, and tourism (IMARC Group, 2025). In the United States, 86.85% of North America’s craft beer market is concentrated, fueled by interest in artisanal and locally sourced brews, with growing consumer emphasis on sustainability and packaging innovations (IMARC Group, 2025).
Emerging Trends: Cannabis Infusion and Market Innovation
Additionally, the beer industry is seeing the rise of **cannabis-infused beverages**, categorized as the “fifth category” of beverages and projected for high growth. Laws allowing consumption of THC and hemp-infused drinks are expanding market opportunities and redefining consumer choices, particularly among younger demographics (Hop Culture, 2025).
Together, these insights illustrate an industry in transition—facing immediate economic challenges while simultaneously setting the stage for innovation driven by changing consumer values and sustainability imperatives.